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Nexus shareholders vow to fight on

Angela Macdonald-Smith

Several Nexus Energy shareholders have not given up their efforts to derail Seven Group Holdings' controversial takeover of the oil and gas junior and have appealed to the securities regulator to block the deal.

The Australian Securities and Investments Commission is in the middle of a process to consider the $180 million deal, which would see Seven pay nothing to shareholders, who rejected an earlier 2¢ a share offer.

For the transaction to proceed ASIC needs to grant relief on the prohibition on effecting the share transfer in the proposed deal, which then passes to the Federal Court for final sign-off. The court will consider a valuation being prepared on Nexus' assets as part of its process.

Creditors to Nexus approved a deed of company arrangement for the takeover at a meeting in Melbourne last month after a process run by Gresham Advisory Partners failed to generate any alternative offers to Seven's. The Seven deal would see the senior lender paid in full, while noteholders receive 74.5¢ in the dollar.

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No creditors raised objections at the meeting early last month, however not all seem to be satisfied with the deal, with bondholder Tor Investment Management said to have retained law firm Arnold Bloch Leibler to advise on its options.

Yet to be determined too is whether drill-rig owner Sedco will agree to a $30 million settlement for an outstanding dispute with Nexus, rather than the originally agreed $US30 million.

Seven Group chief financial officer Richard Richards said last week that the situation represented "somewhat uncharted waters" after the history of the process of the bid.

"So in that context ASIC as the regulator and the courts still have a role to play to ensure that the appropriate application of the law," he said.

"No doubt they are looking at this as somewhat unusual and a precedent transaction for them and so they will apply the appropriate governance in working out whether they will exercise their discretion in relation to the particular relief that we require to effect the transaction."

Sean Wilson, a spokesman for the Nexus Battle group of shareholders, who have been fiercely critical of Seven throughout the process, said "numerous" shareholder complaints had been made to ASIC.

"Now is their chance to stand up for the 9000 Nexus shareholders as they have to approve the deed of company arrangement before the court does," he said.

Mr Wilson describes Seven's behaviour as "value destructive" by buying Nexus' debt and forcing shareholders to sell to them with the threat in the background that the company would be placed into administration. He said the administration process run by McGrath Nicol and the Gresham sale process had been too quick for some parties to carry out due diligence.

It remains unclear whether major shareholders such as Andy Greig, the former head of Bechtel in Australia, who is said to have invested $1 million in Nexus shares, is among the shareholders that have complained to ASIC.

Some shareholders had previously lodged complaints to ASIC in May and June over what they saw as undue pressure being exerted by Nexus to get them to alter their vote on the Seven takeover resolution in the lead-up to the shareholder vote.

ASIC declined to comment on any complaints it has received over the transaction or its consideration of the broader deal.

"Much of the timing can depend on developments in the course of the transaction and the timing of other parties involved in the transaction," a spokeswoman noted.